Do you understand the tremendous value in crafting a good project charter—and how to make an effective charter for your projects?
This guide is useful for anyone who leads or manages projects—I’ll explain what a project charter is and how a well-crafted one keeps us on track. You’ll learn the difference between a project charter and a Scope of Work (SoW) and how you can use a charter in the various phases of project management in the project management life cycle. You’ll also find project charter samples and a project charter template.
The time you spend crafting a thoughtful, comprehensive charter will always pay off in time saved down the line—so let’s talk about how to make your charter as useful as it can be.
What Is A Project Charter? A Project Charter Definition
The scope, objectives, and people involved in a project.
At least, this is the basic project charter definition found all over the internet. This isn’t wrong, per se, but it does focus on the project charter elements rather than its purpose. It’s a very abstract definition, which explains the dismissive attitude many people have toward this document.
It misses the fact that charters are essential documented authorization for projects. The operative word here is “charter,” and the project charter meaning is similar to when used in a legal sense—a charter of rights, charter schools, etc. In our context, a charter in project management authorizes the project to exist and gives the project manager authority to use organizational resources to carry out the project. With that in mind, here is a more useful definition that effectively captures its purpose:
A Better Project Charter Definition:
A project charter is a formal project authorization which documents the shared understanding of a project’s scope, development, and objectives, while also defining the roles and responsibilities of each party involved.
Project Charter Template
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Project Charter Vs Statement Of Work: What’s The Difference?
Project charters and Statements of Work (SoW) function together—you need both of them. Typically, a SoW comes first and is eventually incorporated into the charter. So then, what is a charter, and what is a SoW? How are they different?
Statement Of Work
A SoW is an overview document that addresses why the project is proposed (i.e. the business need for the project), states what is included or not included in the project, and describes what the deliverables look like. It describes:
- the scope of the proposed project,
- proposed deliverables,
- project assumptions and exclusions, and
- the proposed criteria for accepting the project.
A SoW is a crucial point of reference for all parties involved, and it’s absolutely essential for PMs to know how to create a SoW. It can save you from a world of trouble, but even a tiny mistake in your SoW can have massive repercussions down the line.
A Project charter, on the other hand, is a formal document based on the SoW which is submitted for authorization. It gives the project manager the authority to spend the project budget in the delivery of the project. Project charter objectives are to address the “why, who, what, when, where, and how” of the project.
“Wait a minute,” you say, “isn’t that a project plan?” Yes and no. A project charter is the foundation upon which a project plan is built, so they are similar (see our guide to learn how to write a project plan). However, a charter is typically prepared during the project initiation stage. You might also call it a brief or a project initiation document (abbreviated as PID; for more on this, you can read our expert article on Project Initiation Documents). If approved, the project moves into the planning process. There, the charter becomes the foundation for the project plan.
Why Is The Project Charter So Important?
We’ve touched briefly on how a good project charter should start off your project and keep it on track. Let’s consider this more in-depth, from the perspectives of each party involved:
The Benefits Of Project Charters For Project Managers & Teams
- Helps determine project value: help you determine if it’s worthwhile to carry out or propose the project.
- Saves time down the road: the time you take at the beginning is time you won’t need to spend trouble?shooting and negotiating if you’ve already addressed these areas in the project charter.
- Gives you budget clarity: ensure that funding is available and will be released on time. Settle your spending authority and budgets prior to starting the project.
- Helps you give clear guidelines to your team: The milestones and criteria for measurement give invaluable guidance to your team as you begin to brief out the project.
- Inspires confidence: gives the team assurance that they’re working under an effective and well-organized project manager.
- Boosts team morale: A team working under a sloppy charter will repeatedly find themselves confused, with their hard work wasted or headed in the wrong direction. A well-written charter gives clear guidelines for success that your team can feel motivated and confident to work toward.
The Benefits Of Project Charters For Clients & Stakeholders
- Creates a shared understanding: stakeholders know what to expect and what pressure it may put on resources. It can be a great source of confidence as it helps them understand exactly what they are approving.
- Serves as a marketing tool: it can function as a sales document, to be distributed to those outside the project team. It can help justify expenses and investment. This article, originally a conference presentation, positions a charter as a “marketing tool” and discusses other considerations for project sponsors to include in a charter.
What Is Included In A Project Charter?
One of the core characteristics of a good project charter is clarity and adequate information. After reading it, everyone should have a clear idea of what the project entails.
Elements Of A Project Charter
The image and following section break down a project charter outline:
- Introduction: explain the purpose of the charter
- Business Case, Project Statement, and Scope: unique project characteristics
- Success Criteria: define the project success and list critical success factors
- Major Requirements or Deliverables: describe the major stakeholder requirements or key project deliverables depending on how you choose to track your deliverables
- Budget: cost estimate, information about spending authority
- Schedule or Milestones: when will the project be complete, and what are the major milestones?
- Constraints and Assumptions: what are the project’s known and unknown parameters at this point in time?
- Summary of Risks: a high-level overview of major threats to the project’s success
- Team and Organization: list who will work on the project, who oversees the project, and outline their roles
- Approvals: a space for stakeholders to record their approval (or disapproval) of the charter document
In addition to these project charter sections, you may also include an appendix with documents such as:
- List of deliverables: if deliverables are already defined, this list contains details about each deliverable—what it is and what its success criteria is
- Scheduling documents: a timeline, calendar, or other documents that illustrates the project schedule with details about each milestone or phase
- Communication plan: this includes details about how each person involved will be kept informed about progress, changes, etc. (Here’s how to create a communication plan)
The Project Management Book of Knowledge (PMBOK) is a good source for extensive discussions about many of these elements, and the Project Management Institute has an excellent guide to help you get through that immense book.
Project Charter Examples
Because a project charter format should adapt to serve the objective and proposed work, it is worthwhile to consider different examples of project charters. Here are three pretty different project charter examples to draw from.
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How to Write A Project Charter Document
There’s no single best process to write a project management charter, but here is a basic process to follow when creating one:
1. Discuss With Stakeholders & Team
Gather information about the project (potentially a series of roundtables). Meet with all the parties who’d be involved if the project is approved. This includes the project manager, sponsors, clients, and representative team members. It may also include other teams that provide special support, such as network capacity and security experts.
2. Take & Organize Notes
In your discussions, take notes to be able to fill out the information for all the parts of a project charter. Always anchor your discussions on the primary objective, and then determine and record the subsequent details so you can include them later in your charter document.
3. Use A Template
As for the format of the actual charter document, take advantage of the myriad project charter templates available online–review a few and combine them to create the format that best serves your project. You could also use one of the sample project charters in this post and build your own, but we’ve made an easy-to-use charter template for DPM Members you can access, along with bunch of other time-saving resources.
Or, if you want to build your own charter from scratch, you can work through this detailed guide from the Treasury Board of Canada, line-by-line.
4. Include Specific Information
Let’s start with a bad example. For a banking client, a project manager writes the goal statement in the charter as “improve communication channels”. This is a goal, but it fails to detail exactly what the project seeks to achieve. You can’t answer basic questions like:
- Whose communication channels will be improved? Customers? Internal staff?
- How many users’ needs are we trying to address?
- Will we be updating an existing system or building a completely new system?
- When will it be completed?
- Does the scope extend to training on the new communication tool?
- Will the contract include any ongoing support for the system?
A complete charter would provide clear, specific information on these questions in order for the reader to understand the goal. Here’s an example:
“Our goal: Create new communication system to replace ABC system by December 2019, so that all customers can chat to their product managers via XYZ bank’s proprietary mobile apps. Train all 400 employees to maintain and support the system themselves.”
Of course, this is only the goal statement, not the entire charter. However, you can see the difference between a sloppily written and thoughtfully written charter. Just like this goal statement example, other elements of your charter should be detailed, whether it’s the summary of risks, milestones, etc. In other words, ensure that the reader gets all the information they need to consider in order to approve the project.
5. Review With Team Representatives
After writing a project charter but before putting your charter in front of a client, set aside time to review the charter with key members of your team in order to make sure it’s accurate.
6. Present For Approval
Notice that this step is not “send for approval”. Your charter is your key to getting approval to undertake the project, and it’s important that it’s presented properly. Avoid simply attaching your charter as a PDF in an email. Instead, present your charter to your sponsors, stakeholders, or clients—do this in a meeting or through a slide presentation that includes supporting media. Make sure you leave time for questions and answers.
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What Do You Think?
What’s your approach to creating an effective project management charter? What do you include, and how do you present it? Share your input with the DPM community below.